Monday, May 28, 2012

A Start-up Guide To Leasing Office Space

If you are a start-up, leasing office space might be a wiser decision than purchasing a space outright. There are other options as well such as a virtual office, or a shared office space, but let's leave that to another time. If you have decided on going the lease way, here is what you are likely to encounter.

About the advertised area, lease duration etc.

Office spaces available for lease are generally advertised as per square feet, 3000 square foot area. When it is said a 3000 square foot area, it refers to the super area.' However, the usable area is lesser than that. Thus, if you are looking for 250 square foot of usable space, it is better if you look for spaces available for lease, which are at least 350 to 400 square foot in super' area.

As far as the lease duration is concerned, that is negotiable. Therefore, when an owner says the minimum lease period is 3 years, you can put your foot down and negotiate. If you are just starting out, it is better for have a lease term of the minimum possible duration. A lease duration of 11 months works fine for start-ups.

Other considerations to make

The lease duration isn't the only factor you need to take into consideration. Very often, deciding on how much space is needed is perplexing for new entrepreneurs. While there are no hard and fast rules here, here is as advise you would do well to follow- go for an area which can comfortably accommodate a team of 2-3 people and still leaves enough room for a couple of more people at a later stage. As a start-up, you don't want to be wasting money by having a large area which goes wasted. At the same time, you don't want to be in a situation where expansion becomes a worry for you.

What if things don't work out well?

In case your business does not take the direction you had in mind, you could still work things out. To make sure you minimize your losses, sub-leasing space is a good idea. For that to happen though, you need a sub-lease clause in the lease agreement. Make sure you negotiate that before signing on the dotted line.

However, considering the current economic scenario, office real estate market is at an all- time low. Thus, sub leasing space may not get you much. In situations like these, don't be shy to negotiate with the owner. Most times, lease agreements are flexible and you could get them terminated before the period ends through some negotiation.

If you don't want to go through all that

If you don't want to take the risk of renting an office space only to realize that you are running into losses, it is always better to go the virtual way. There are service providers out there who offer services such as a premium business address, call handling etc. without you having to pay the entire rent of the place. It is a less risky approach, and once you start to grow, you can always looking for an office space on rent.

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